Stocks edged lower Monday amid fading U.S.-China trade optimism. Reports indicated Beijing would need to engage in further talks before signing an initial trade deal announced Friday. Treasury Secretary Mnuchin commented this morning that both parties had made “substantial progress,” though the pact is still “subject to documentation.” Mnuchin also admitted that the tariffs are still set to rise in December if no deal is reached by then. The Dow is dipped 29 points, snapping a three-day winning streak. The S&P 500 and Nasdaq Composite each lost 0.1%.
The S&P 500 ended a three-week losing streak last Friday on news the U.S. and China agreed to a “phase one” trade agreement. Washington canceled a tariff hike on Chinese imports that was due to be implemented this week, while Beijing conceded to increase purchases of U.S. agricultural products.
Nine of 11 S&P 500 sectors closed in negative territory Monday, with Materials and Utilities leading decliners. Financials outperformed ahead of tomorrow’s unofficial start of third-quarter earnings season. Some of Wall Street’s biggest banks will report before the opening bell, including JPMorgan, Goldman Sachs, and Citigroup.
The U.S. Treasury market was closed due to the Columbus Day federal holiday, with the yield on the 10-year note ending Friday at 1.73%. On the data front, an early release of the Empire Manufacturing survey revealed business activity in New York State grew slightly in October. In commodities, WTI crude shed 2% to $53.59/barrel, while COMEX gold was up 0.5% to $1490.00/ounce despite a stronger dollar.